A souring of diplomatic relations between the governments of the Philippines and the United States has raised uncertainties over the future of US foreign aid in the country.

Questions about future funding levels emerged after the Philippines’ outspoken and controversial president, Rodrigo Duterte, taunted the United States and the European Union about the idea of pulling out their aid from the Philippines during a speech in October.

“I do not expect human rights, I do not expect Obama, I do not expect the EU to understand me,” Duterte said during a speech before members of the Philippine National Police in October. “If you think it is high time for you guys to withdraw your assistance, go ahead. We will not beg for it.”

Duterte followed his remarks with further pronouncements of military and economic separation from the United States during a visit to China in the same month.

“In this venue, I announce my separation from the United States both in military, not maybe social, but economics also,” he said toward the end of his speech during the Philippine-China Trade and Investment Forum where Chinese vice Premier Zhang Gaoli was in attendance.

The president’s remarks came after several US figures called into question the Philippine leader’s approach in curbing the illicit drug trade in the country.

There have been over 5,000 deaths linked to the president’s “war on drugs” campaign that started in July, according to data from the Philippine National Police. Human rights groups have been calling on the government to launch an investigation of the killings, which include both police and suspected vigilantes.

Some US government officials have spoken of applying the Leahy Law on US assistance to the Philippines if the extrajudicial killings continue. The law prohibits the US from providing assistance to a security force unit of a foreign country that has committed “gross human rights violations” and where the government has not taken any measures for accountability.

“The Leahy Law should be used to encourage reform and accountability, but to address these systemic challenges it may be necessary to consider further conditions on assistance to the Duterte government to ensure that US taxpayer funds are properly spent and until that government demonstrates a commitment to the rule of law,” US Sen. Patrick Leahy from Vermont said during a Senate floor debate in September, regarding recent developments on addressing criminality in the Philippines and Indonesia. “I have asked the State Department to discuss this with us to help inform our deliberations on current assistance for the Philippines and on decisions we will make for appropriations in fiscal year 2017.”

Nongovernmental organisations that are receiving funding from the US have yet to make sense what all these disputes mean for their development programmes in the country. The Philippines is a long-time US ally and receives significant amounts of assistance from the bilateral donor. In 2015, the Philippines was the top recipient of US foreign aid among Southeast Asian nations, based on Devex analysis of data figures from the Organisation for Economic Cooperation and Development, receiving $236.9 million. Some aid officials working in international and local organisations told Devex that Duterte’s remarks could be rhetoric that is unlikely to turn into meaningful policy. Another element of uncertainty is the US presidential election victory of Republican Donald Trump, whose initial contact with Duterte has been described positively by both sides but whom many development experts fear will cut US aid funding across the world.

Due to the political sensitivities involved, a number of foreign NGOs did not respond to repeated calls and emails by Devex. Some declined to comment and instead deferred response to the USAID mission in the Philippines. But some of those who did comment said they expected relationship between the two countries to continue unchanged.

“What I hear is that the government is keen on continuing the relationship,” said an aid official working for an international INGO providing technical assistance and capacity building work to the government on global health programmes. The aid official requested anonymity to speak in his personal capacity, so as not to involve his organisation in the controversy. “It’s just a matter of habit for the president to say harsh words,” the official added.

Mixed feelings

At the local level, implications of a USAID withdrawal appear mostly minimal, based on Devex’s conversations with local organisations. Still, some groups did voice concerns.

Resources for the Blind, Inc. is a local non-profit organisation in the Philippines that works to advocate for the rights of people with visual impairments. In 2015, the organisation secured grant funding from the Philippines-American Fund, a five-year, $24 million grant-making facility launched by USAID Philippines in 2013. RBI’s programme aims to capacitate facilitators at five of the Department of Education’s adult learning or vocation rehabilitation centers in five cities in Mindanao to produce reading materials for adults with visual impairments that are coming to their facilities. The students could also use the equipment to further their education.

The project’s two-year run is scheduled to end next year, and Amy Mojica, RBI’s project director for the programme, isn’t sure if they’ll have another funding opportunity to scale up the programme.

But Mojica didn’t appear perturbed. “We know from the beginning USAID support is not for the long term,” she said. “That’s why part of the project is advocating for the rights of these groups of persons, as we want to make sure local government units will be willing to shoulder the expenses or make the programme sustainable. In the first place, it’s the government’s responsibility.”

The director of CODE-INGO, the largest coalition of development NGOs in the Philippines, argued the impact on local organisations of a US aid pullout may not have as big an impact as some fear. Foreign aid funding from the United States and other donors for local and civil society organisations in the country is already limited, he said.

“The situation now is that very few local NGOs are really supported by USAID or other US government funds. So it’s not a general concern in that sense,” said Donato Macasaet, CODE-INGO director. “Those who stand to lose [in case of a US aid withdrawal] are just a few local NGOs.”

Under its USAID Forward programme, the US government targeted up to 30 percent of its funding to local organisations by 2015. The USAID mission in the Philippines further increased this ambition to 40 percent of their budget. However, only a few local organisations and educational institutions continue to receive direct grants from the bilateral aid agency. One example is the Gerry Roxas Foundation, which currently manages the Philippines-American Fund.

But that is far from the whole story: some groups are deeply worried. A local organisation based in the southern Philippines is “very much concerned” about the potential impact the diplomatic tensions will have on the vulnerable communities they are part of and are trying to serve in the region, an aid official told Devex. USAID is the organisation’s largest donor on its social development work in Mindanao.

“A USAID pullout would greatly affect the development of Mindanao,” said the organisation’s head, who requested anonymity because of the tense political climate. “We cannot deny how big is the contribution of USAID in terms of development, especially in remote communities in Mindanao.”

It’s difficult to tell how much money USAID channels to development work in Mindanao, based on data from the US data portal foreignassistance.gov, but the agency does have several projects there. In 2013, the aid agency launched a five-year health service strengthening project in Mindanao aimed at improving maternal, infant and child health outcomes in the region. It also has programmes targeted toward youth in the region, including those out of school.

Historically, US aid spending in Mindanao has far eclipsed other regions of the Philippines. Over the past two decades, USAID’s assistance has covered a wide range of technical areas across the Mindanao region, including infrastructure and agriculture development, education, governance, health, environmental management and microfinance. The over $200 million Growth with Equity in Mindanao programme that ran from 1995 to 2012 was one of USAID’s largest and most diverse programmes. GEM’s aims is to promote peace and economic growth in the region, but with a particular focus on the five provinces making up the Autonomous Region in Muslim Mindanao, which has been beset by decades of armed conflict and unrest.

In a Devex interview in 2014, then USAID mission director Gloria Steele told Devex of USAID plans to even out its assistance in the Philippines and better align its resources to the Philippine government’s development agenda, which meant scaling back some of its programmes in Mindanao. However, USAID is unlikely to take its eyes off Mindanao given the region’s vulnerability to violent extremism.

USAID pullout ‘highly unlikely’

The few international organisations that agreed to speak to Devex didn’t think USAID would pull out its assistance in the country. If it did, it will only be for assistance to the government, not NGOs or civil society organisations.

“We think this scenario is highly unlikely,” said Patrick Fine, chief executive officer at FHI 360, a US-based organisation working on global health issues in more than 70 countries. The organisation currently has one health project funded by USAID in the Philippines.

Fine pointed to an August 2016 independent evaluation USAID issued regarding its work in health sector in the Philippines. The evaluation’s conclusions and recommendations point to a number of new engagements for USAID in the health sector, including building the capacity of the Philippines’ Department of Health’s health policy development and planning bureau, and providing training to National TB Programme staff and TB-DOTS providers. The evaluation also recommended USAID continue its various health programmes in Mindanao “given the region’s difficult geography and political volatility, and the fact that ARMM has some of the worst education and health indicators nationwide.”

“We do not expect the US and Philippines would want to cancel a successful programme and lose the investment made to date,” Fine said. “Cancelling projects would obviously hurt the people benefitting from these projects.”

Jojo Fajardo, programme manager in the Philippines of INGO Green Empowerment, meanwhile commented that in the event USAID decides to withdraw its support from the Philippines, this will mainly be funding among government agencies, and not NGOs or CSOs.

“My projection is, funding for CSOs and NGOs will increase once USAID reduces its support to government,” Fajardo said.

Larger concerns

Most experts agree that it is still far too early to tell what impact Duterte’s anti-US and pro-China statements will have on the future of US foreign aid in the country – or if it will have any impact at all.

Duterte’s comments are just one part of the story, said Ronald Mendoza, dean of the Ateneo School of government and economist with an extensive background on development and public policy. “I think right now there are other variables we need to consider, not just him.”

According to Mendoza, civil society groups and NGOs in the Philippines are worried about US president-elect and his potentially conservative foreign policies as well as the risks they may pose to levels of US development funding. Trump once hinted at limiting US role in humanitarian assistance and has stated that he does not believe in climate change, two areas where the Philippines could benefit for more support from donors including USAID.

“We’d want to find out what he’ll prioritise and how that will interact with our own priorities. So I think that’s what we need to look out for,” Mendoza said.

It may take a few more months before the aid community can get a good grasp of what a Trump presidency would mean for US development policies and priorities abroad, including in the Philippines.

Duterte’s phone call with Trump on December 2 appeared encouraging as regards the two countries’ relations. Duterte said after the call that he could “sense a good rapport” between the two of them and that he appreciated Trump’s alleged well wishes on his anti-drug campaign.

“He was wishing me success in my campaign against the drug problem,” Duterte said in a video statement released by his office on December 2. “I appreciate the response that I got from President-elect Trump and I would like to wish him success. He will be a good president for the United States of America. I am very sure.”